Increased Milk Supplies Expected in 2006

Additional milk supplies will lower milk prices.

Published on: Jan 10, 2006

Milk income production is expected to expand by another $4.5 billion pounds in 2006 after increasing by 6 billion pounds in 2005, says Scott Brown, economist from the University of Missouri of Food and Agricultural Policy and Research Institute. 

The additional supplies of milk will result in lower milk prices in 2006. Brown estimates quarterly prices to drop in the 1st quarter to $14 per hundredweight and then linger around the $13 cwt for the remainder of 2006.

World prices for nonfat dry milk are expected to remain at levels that allow for U.S. commercial exports of NDM and will keep prices $0.15 to $0.20 above the Commodity Credit Corporation price support level.

The extension of the Milk Income Loss Contract Program brings an additional $1 billion into dairy income. Milk prices are expected to decline by nearly $2 per hundredweight in 2006 with the additional supplies of milk. Milk prices will likely continue the volatility they have shown the last several years.